Darabont Sues AMC Over “Walking Dead” Profit Manipulations

The Walking Dead is one of the biggest hits on TV right now and former producer Frank Darabont wants what’s his.

Darabont and his representatives at the Creative Arts Agency (CAA) filed a lawsuit alleging that they are owed “tens of millions” in profits from the hit zombie drama. According to the Hollywood Reporter, the suit stems from a promised profit-share agreement that AMC avoided with an in-house licensing scheme that, the suit alleges, allows the network to claim the show is actually operating at a deficit.

“AMC’s conduct toward Frank to date has been nothing short of atrocious,” lead lawyer Dale Kinsella tells Hollywood Reporter. “Unfortunately, the fans ofThe Walking Dead have suffered as well by being deprived of his creative talent.”

The suit alleged the hit series is following a pattern of other big Hollywood hits and utilizing “vertical integration,” a practice of allegedly manipulating license fees to minimize or eliminate payments to the talent associated with a hit series.

According to the suit, AMC initially agreed contractually in September 2009 that the series would be produced by an unaffiliated studio such as Lionsgate or Warner Bros. Darabont would receive as much as 12.5 percent of that entity’s profit after standard industry deductions.

When Darabont delivered the script that was the basis for the first six-episode season, however, the suit alleges AMC decided to produce and broadcast the show in-house. Darabont’s representatives at CAA and the Jackoway Tyerman law firm agreed only after “gaining assurances from AMC that Darabont would obtain protections against improper self-dealing,” the suit alleges. Those protections included a commitment by AMC to “pay” its studio an “imputed” license fee comparable to what the show would get if it were made by an independent studio. Talent lawyers typically ask for such assurances.

Darabont repeatedly asked AMC to spell out the terms of his profit participation, the suit says, but the company waited to see how the show would perform. When it was clear that Walking Dead was a runaway hit, AMC then provided a proposal in February 2011 based on “an unconscionably low license fee formula” designed to ensure that the show would never be in profit, according to the suit. “AMC capped the license fee in perpetuity at the lower of 65 percent of the costs of producing the series or $1.45 million per episode, meaning that there would be a significant deficit on every episode produced for the life of the series.”